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TAKING ON STAFF - REF TAX

Posted by dave (dave), 6 November 2003
Hello

I'm looking to take on extra staff and hope you might be able to help.

If we employ someone on a part-time basis, do we have to register them as PAYE (on the books) or can they go self-employed.

For example: If they do work for us on a part-time regular basis are they able to present us with an invoice, which we then pay, and at the end of the year they fill in their own self-assessment form and pay their own tax and NI.

The reason I ask the question, although we are registered with the tax office, we do have staff working for us that can only do 1 day for 3 hours per week and it seems a lot of time and paperwork.

Hopefully looking for an easy answer,

Regards DAVE
Posted by Musicman (Musicman), 6 November 2003
Hi Dave, the following is from the Inland Revenue's web site - I'm sure they wont mind.

Employed or self-employed?

Employed

If you can answer 'Yes' to the following questions, you are probably employed.

Do you yourself have to do the work rather than hire someone else to do it for you?
Can someone tell you at any time what to do or when and how to do it?
Are you paid by the hour, week, or month? Can you get overtime pay?
Do you work set hours, or a given number of hours a week or month?
Do you work at the premises of the person you work for, or at a place or places he or she decides?


Self-employed

If you can answer 'Yes' to the following questions, it will usually mean you are self-employed.

Do you have the final say in how the business is run?
Do you risk your own money in the business?
Are you responsible for meeting the losses as well as taking the profits?
Do you provide the main items of equipment you need to do your job, not just the small tools many employees providefor themselves?
Are you free to hire other people on your own terms to do the work you have taken on? Do you pay them out of your own pocket?
Do you have to correct unsatisfactory work in your own time and at your own expense?

In summary, if you take staff on they will be employed whether for 3 hours a week or 40. If they only do 3 hours a week it is unlikely they will need be eligable for NI unless they have another job which takes their earnings over 89.00 per week.

For 3 hours a week is it really worth their while to go through the arduous process of raising and submitting invoices to you and completing the Self-Assesment form?

Is that easy enough?

Musicman

Posted by Fox (Fox), 6 November 2003
Working for 3 hours per week they will definately not pay NI so if they are employed by you, you won't have to pay employers contributions.

However if they have a second job and the hours they do for you are not 'their main' hours they will have to go on a tax code of BR instead of 461L.

This means you will be involved with PAYE.

What is useful to know in this business is if a person comes and does a days work for you, then ups and leaves, you don't have to notify the tax office.

Hope this helps.
Posted by Fox (Fox), 6 November 2003
Forgot to mention

If you do use sub contractors your insurance company will want to know if they are bonafide.  So who ever use will have to have their own public liability insurance too!
Posted by dave (dave), 7 November 2003
Thanks for the replies, they have cleared the matter up in my own mind that they will go PAYE and this also resolves the matter about employee and public liability insurance cover if they come on the books.

Regards Dave.


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